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Investing.com - Morgan Stanley (NYSE:MS) initiated coverage on Manhattan Associates, Inc. (NASDAQ:MANH) with an Underweight rating and a price target of $190.00 on Monday. According to InvestingPro data, the stock currently trades at a P/E ratio of 55.3x and has seen 8 analysts revise their earnings estimates downward for the upcoming period.
The firm notes that Manhattan Associates operates in a large core total addressable market (TAM) of $12 billion and has been gaining market share. Morgan Stanley sees the company well-positioned with its cloud solutions to capture additional market share in the cloud TAM, which is projected to grow at a 16% CAGR through 2028. The company maintains strong financial health with an "GREAT" overall score from InvestingPro, supported by a robust 55.6% gross profit margin.
Morgan Stanley identifies an attractive $1.5 billion baseline cloud revenue opportunity as Manhattan Associates transitions its customer base to cloud services, with approximately 80% of customers still using on-premises solutions. The firm also sees potential for cross-selling additional products to existing cloud customers as early cloud customers approach renewal in the second half of 2026 and fiscal year 2027.
Despite these opportunities, Morgan Stanley cites near-term downside risks to consensus cloud revenue estimates for FY26 due to a weaker macro environment causing slower cloud remaining performance obligation (cRPO) bookings. The firm notes this could impact management’s guidance of growing cloud revenue by more than 20%.
Morgan Stanley also points to a recent slowdown in professional services revenue growth, which comprises approximately 50% of total revenue, raising questions about whether the slowdown is cyclical or potentially more structural in nature. For deeper insights into Manhattan Associates’ financial health and growth prospects, investors can access comprehensive analysis through InvestingPro’s detailed research reports, available for over 1,400 US stocks.
In other recent news, Manhattan Associates has seen a mix of analyst ratings and price target adjustments. Redburn-Atlantic downgraded the stock from a Buy to a Neutral rating, lowering the price target to $200, citing concerns over the company’s reliance on discretionary professional services. The firm anticipates challenges in the Services segment due to reduced demand for professional services and macroeconomic uncertainties. Meanwhile, Truist Securities increased its price target to $210 and maintained a Buy rating, highlighting strong growth in cloud subscription revenue and strategic collaborations with Google (NASDAQ:GOOGL) and Shopify (NASDAQ:SHOP). DA Davidson also raised its price target to $225, keeping a Buy rating, and noted the company’s focus on product integration and delivering quicker returns on investment. Baird analysts lifted their price target to $212, emphasizing the benefits of cloud adoption and the introduction of AI agents. These developments reflect a varied outlook on Manhattan Associates, with analysts acknowledging both the challenges and opportunities the company faces in its strategic initiatives and market positioning.
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